Yup, it crashes when you do that... (Note: unit is Bacco the Begger in Upper Righthand corner of map)

I also noticed another oddity with the quest. In that you have an easier fight if you do not immediately rush in instead dilly dally... with the dialogue options. Namely, if you attack immediately you will fight

Daxus

2 Level 5 Defenders

3 Level 1 Party of Spearmen

---- If you Hire Daxus and decide to fight you will fight -----

1 Level 7 Defender

2 Level 5 Defenders

2 Level 3 Spearmen

---- If you don't immediately attack and you don't hire Daxus, but attack anyway, you will fight ----

Daxus

2 Level 5 Defenders

2 Level 1 Party of Spearmen

---- If you choose to wait, you get the option to hire daxus and can cause an infinite loop in the quest as was mentioned before ----

I hope they track down this bug, it has been an on off bug throughout.